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Mr. Clive Betts (Sheffield, Attercliffe) (Lab): Oh no.

Mr. Pickles: Yes—another smash-and-grab raid against middle England's savings. Only the Labour party and the Minister of Communities and Local Government could find ways to pursue poor people
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beyond the grave—[Interruption.] Apparently, it is suggested from a sedentary position that the Under-Secretary is at fault. Nevertheless, the right hon. Gentleman must accept some responsibility.

We know that the Government are examining information technology as a way of bringing in more money. They sent out a questionnaire on tax rebanding to IT firms in which they asked about four additional council tax bands and higher band multipliers so that people in higher bands would pay more money, although the band of their properties had not changed. They have suggested cutting eligibility for discounts and exemptions. They have also considered discount schemes to cushion millions of council tax payers who move up two or more bands. The Government claim that the suggestions are not proof of likely reforms, but if that is the case, why are they asking such questions?

The Lyons review is just another depressing example of the ping-pong between structure and finance. We seem to go through a process of trying to change the way in which local councils are financed or structured. Revaluation and regionalism are two extremes of the massive ping-pong process. That is a great pity, because changes in local authorities are taking place without anyone really understanding their impact. Strategic partnerships and local area agreements clearly show how adaptable local authorities can be.

I firmly believe that function and finance are two sides of the same coin. If we were sensible, we would give local authorities the ability to share their sovereignty, responsibilities and resources. We would allow money to follow services and function to determine structure. Local authorities with a common concern could thus band together to provide better services for their electorates. It will be a good thing if Lyons recognises that change, but it will be bad if the review just leads to a further extension of the salami-slicing that has affected local government for so long.

Local government is one of the most adaptable of our institutions. We should give it freedom, and instead of trying to control the way in which local grant is distributed, we should allow money to follow services. We should work for local diversity. If we could do that, we would have the chance of building a real consensus, instead of worrying about the knock-on effects of one specific change.

For too long I have been listening to debates in this Chamber during which we have put together various schemes that have required transitional periods. Those periods become complicated, so another scheme comes along, which requires another transitional period that must be related to the first transitional period. That process must stop. We have an opportunity to give local government its head and some freedom, and that is essentially what new localism should be about.

1.23 pm

The Minister for Local Government (Mr. Phil Woolas): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

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I am delighted that the Opposition have chosen to debate this issue. I was genuinely thrilled when I found out the date of the debate, because I now have the opportunity to put on the record the Government's future intentions on policy and to respond to criticisms that have been made outside the House. I genuinely welcome the debate.

The last time that we debated council tax in the House was 4 July. Since that date we have made an important announcement on postponing the revaluation, which was described by the hon. Member for Brentwood and Ongar (Mr. Pickles) and others—and, indeed, by my right hon. Friend the Minister of Communities and Local Government—as a U-turn. We were honest and up front about the decision, which I shall explain in some detail today.

The announcement of 20 September was important not only because of what it said about the revaluation exercise, but because of the extension of Sir Michael Lyons's independent inquiry. After reaching the decision to postpone the revaluation, we thought it right and proper for several reasons to make the announcement at that time, not least because the preparation work undertaken by the Valuation Office Agency could be stood down to minimise costs. The hon. Member for Meriden (Mrs. Spelman) has tabled questions about the matter and made points about it, but not all the money spent could fairly be described as having been wasted. The vast bulk of the money was for computerisation and data collection, and that work will be valid in the future. If we had continued the work and waited until the House had returned to make the announcement, she could have made such a charge.

Mr. Brian Binley (Northampton, South) (Con) rose—

David T.C. Davies rose—

Mr. Woolas: May I put the situation on the record, after which I will be more than happy to take interventions?

Given the importance of the announcement and the widespread interest in it, I regret that we were unable to make it when the House was sitting.

Mr. Binley: Will the Minister give way?

Mr. Woolas: May I put the background on record? Then we can move on to policy points.

My right hon. Friend the Minister of Communities and Local Government wrote at the time to all hon. Members with English constituencies to explain the decision. No discourtesy at all was intended to you Mr. Speaker, or to the House.
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There has been a huge amount of posturing by the Government's opponents and a lot of misinformation has been produced about the revaluation decision and policy, so the debate is a useful opportunity to clear the air and get the facts straight before we debate the Bill to postpone revaluation, which received its First Reading on 14 October. Copies of the full text of the 20 September announcement are of course available in the Library. Nevertheless, I think that it is important that I set out fully what it says.

The House will recall that the Government appointed Sir Michael Lyons in July 2004 to carry out an independent inquiry into local government funding. He has made good progress with that remit and I should stress that the original remit stands. We have extended the remit, not replaced it. Sir Michael has discussed with Ministers his work so far. His initial conclusion is that well-founded recommendations on possible reforms to the funding of local government cannot sensibly be made in isolation from a proper consideration and understanding of the developing role and functions of local government, not only by central Government but by the population at large.

Sir Michael has made it clear that any proposals for reform of the funding system raise complex issues. The Government have agreed that they need to be set firmly and explicitly in the wider context of a clear and shared understanding of the role of local government and of the accountability of councils to service users, residents and taxpayers. It was for that reason that my right hon. Friends the Chancellor of the Exchequer and the Deputy Prime Minister extended the terms of reference of the inquiry.

The Government have agreed with Sir Michael that he will review, through a series of discussion documents, the current and emerging strategic role of local government in the context of national and local priorities for local services, including the implications of that for accountability. He will also review how the Government's agenda for devolution and decentralisation to local councils, together with changes in decision making and funding, could improve local services, the responsiveness of those services to users and, of course, local authorities' financial efficiency. In the light of that work, Sir Michael will address critical funding issues, including fairness, accountability, clarity, efficiency and effective management. He will produce his final report at the end of 2006. I know that when taking forward the new remit Sir Michael will want to work closely with local government as well as drawing on the assistance of Government Departments. I hope and expect that other parties present will participate in those discussions.

The additional work that Sir Michael will undertake will add value to the Government's current work on a strategic view of the role and functions of local government under the local vision programme, about which I shall say more later. It will also contribute to the comprehensive spending review 2007, which will set the path for local government funding for the medium term. To set the scene for that work, later this autumn Sir Michael will set out his preliminary thinking and publish research and analysis undertaken so far, drawing out the relationship between local government function and finance.
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It is obvious to everyone that the future of local government is critical to the future of the country, of local communities and of individuals.

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